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Take your 401(k) away

By Jennie L. Phipps ·
Thursday, May 16, 2013
Posted: 5 pm ET

Here's some info about a little-known retirement planning tool.

If you dislike your 401(k) plan and you are 59 1/2, chances are good that you can roll your money out of that retirement plan and into an IRA and keep on working at the same old job.

"We have a lot of clients who are stuck in 401(k) plans that offer very limited choices -- mutual funds with hefty fees," says Mike Piershale, president of Piershale Financial Group in Crystal Lake, Ill.

Those are the people Piershale urges to check with their employers to see if they allow "in-service rollovers."  The Plan Sponsor Council of America estimates that 79 percent of employers allow them -- 84 percent of large employers -- but they rarely publicize the possibility.

If you are younger than 59 1/2, you have fewer options. If you had previously rolled over a 401(k) that you earned working for another employer, you may be able to change your mind and roll that into an IRA. And there are a couple of other very narrow circumstances when under-59 1/2 rollovers are permitted. Even then, if you're not careful, you'll trigger Internal Revenue Service penalties.

An in-service rollover doesn't stop you from continuing to contribute to your 401(k), so you can keep on working and get any available company matches on new contributions. You also don't have to take all your money out of your 401(k). You can just roll over a portion and leave the rest invested in the more attractive opportunities.

While wresting your money out of your employer's reach may seem like an appealing idea, before you do it, consider the advantages of your current 401(k). If you're getting a great deal -- high-earning funds and low fees -- it pays to stick around.



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